A fine of $55 million imposed on the National Bank of Pakistan in regard to non-compliance with anti-money laundering laws
On Thursday, this penalty came as a setback to an already derailed economy of Pakistan. The National Bank of Pakistan (NPB), operating in New York, received the penalty concerning non-compliance with anti-money laundering laws.
The penalty was announced by the Federal Reserve Board (FDB) against NPB for violations in monetary schemes. It is important to note that the NPB is a subsidiary of the State Bank of Pakistan, Pakistan’s central bank.
In the meanwhile, the investigations for the violations are underway, and the FRB has informed that “despite regulatory warnings,” Pakistan’s bank allowed illegal sanctions.
The official press release, “Failed to Maintain Effective and Compliant Anti-Money Laundering Program” and “Disregarded Numerous Financial Regulatory Warnings,” stated that the condition of the Bank’s New York branch exhibited unsafe and unsound conditions, severe weaknesses that required urgent restructuring.
The Federal broader stated, “As detailed in the consent cease and desist order against the National Bank of Pakistan, the firm’s US banking operations did not maintain an effective risk management program or controls sufficient to comply with anti-money laundering laws.”
Furthermore, the action of the Federal Board was in synchrony with the action of the New York State Department of Financial Services (NYDFS).
Adrienne Harris, the Superintendent of the financial services, stated that it had been agreed by the National Bank of Pakistan and its New York Branch to pay USD 55 million penalty in carrying out a Consent Order that had been entered into with the NYDFS.
In a press release, the NYDFS said, “The Consent Order resolves the Department’s investigation into compliance deficiencies at the Branch with respect to Bank Secrecy Act/ Anti-Money Laundering (BSA/AML) requirements.”
Harris further stated that the National Bank of Pakistan authorized significant compliance deficits prevalent in its operations at the New York branch to continue for years despite repeated regulatory warnings.
The official statement said that the “Foreign banks that enjoy the privilege of operating in New York have an obligation to maintain effective controls, and the Department will continue to promote financial transparency and take action to protect the global financial system when those obligations are not met with.”
This was said while citing some severe issues with its transactions mentoring system and significant shortcomings in managerial oversight.
The penalty adds to Pakistan’s slip into the “BLACK LIST” of the France-based Financial Action Task Force. Experts say that Pakistan’s mention in the list is due to various reasons such as failure in global anti-terrorist financing and non-compliance with money laundering orders.
Edited by: Mahi Gupta
Published by: Vishakha Verma
